The Beginning of The End

I was reading an Article in Economist.com about the Credit Crisis in Emerging Markets. In the views section people are still thinking that India is not effected much and it is just the corrupt American banks that got busted. There was much boasting about surreal achievements and Economic Growth of India. But, I had a different opinion.

Are we not seeing The Beginning of The End...??

May be we need 6 more months to see the true picture of the Economic crisis in the Emerging markets.

In India every Home / Personal / Other kind of loan given by the banks to the people are 'SUB PRIME'. There is nothing like Credit history for anybody there. Till last year a Fresh College Graduate with 6 month payslips got a Home loan to buy a 200 SqYr land in a remote non living area at an unaffordable price .

Lets assume that the Economic Turmoil is going to continue for another 6months or a year. What do you think is going to happen?

1. Job losses / Salary cuts.
2. Investment losses in Stock Markets.
3. Rising commodity prices -- Inflation.

Defaulter toll goes up. Already the Interest rates are quite high. Companies in US are planning to reduce salaries for their employees to cut costs. This impacts the Job holders pay checks in India as well and paying loan becomes a nightmare.

It takes time for the Indicators to show up RED because till the Defaulter count goes up to 10% or so, they do not come into the radars or news and media.So I would assume wait for 6 more months and see the real picture of Credit crisis.